*1 Before the Special Master is a motion filed by Defendants seeking relief due to Plaintiffs’ “failure to comply with their discovery obligations.”

In deciding this motion, the Special Master has reviewed the following submissions: Defendants’ motion, in letter form, with attached exhibits; Plaintiffs’ brief in opposition and exhibits; and Defendants’ reply. See ECF Nos. 205, 210, 218. Furthermore, the parties have filed letters supplementing their previous positions in this ongoing discovery dispute. That is, Defendants have submitted a letter dated January 7, 2022, and Plaintiffs have replied by letter dated January 18, 2022, all of which the Special Master has also reviewed. See ECF Nos. 224 and 226. More recently, in a letter dated January 25, 2022, Defendants further augmented their position essentially stating that Plaintiffs continue to remain deficient in their production responses even beyond their unilaterally extended deadline. See ECF No. 227. Since the parties have serially amended and supplemented their submissions, this Order and Opinion will first address Defendants’ initial application and then address the parties’ supplementations.

After considering the submissions, it is the opinion of the Special Master that Defendants’ motion is GRANTED in part and DENIED in part.

I. Procedural and Factual Background

Given that the parties are intimately familiar with the underlying facts and procedural posture of this matter, the Special Master will only briefly address the facts pertinent to this motion.

Plaintiffs are MSP Recovery Claims Series, LLC; MSPA Claims I, LLC; and Series PMBI (collectively “Plaintiffs”). They are assignees of Medicare C and D healthcare regulated entities which provide health benefits for Medicare beneficiaries. The Plaintiffs are, in effect, debt collectors on behalf of those entities.

Defendants Novo Nordisk, Inc.; Sanofi-Aventis U.S., LLC; and Eli Lilly and Company (collectively “Defendants”) manufacture analog insulin. Simply put, Plaintiffs contend that Defendants employed an insulin pricing scheme which has unlawfully increased the purchase price of that medicine to Defendants’ financial benefit and to the detriment of the healthcare regulated entities. Plaintiffs in this litigation are seeking to recover, as assignees, damages which they assert were caused by this allegedly unlawful pricing scheme.

This motion specifically arises out of the Special Master's January 20, 2021 Order which obligated Plaintiffs to produce discovery on behalf of their assignors as if they were direct parties to the case. It is the Special Master's understanding that claims remain as to twenty (20) assignors. Defendants in their initial application charge that Plaintiffs have not produced any documents from 13 of the 20 assignors and have provided deficient productions as to the remainder, this despite extensions of deadlines for certifying substantial completion of document productions, the last – by mutual agreement – of September 15, 2021.

*2 Defendants seek this relief: (1) an order enforcing the deadline for substantial completion and directing Plaintiffs to complete their assignors’ document productions immediately; (2) an order barring claims on behalf of one specific assignor, Clinica Las Mercedes; (3) an order compelling production of documents from custodial files of certain individuals; and (4) an order extending Defendants’ deadline to propound additional requests for production until two weeks after Plaintiffs have certified substantial completion.

II. Defendants’ Argument

Defendants assert that despite deadline extensions, Plaintiffs have failed to make any meaningful progress toward producing documents. As noted above, no documents for 13 of the 20 assignors have been provided and 7 of the 20 productions are likewise deficient. As an example of the latter, Defendants point to Network Health, the third largest assignor, with approximately $46 million in insulin expenditures for which the Plaintiffs have produced fewer than 250 documents, none of which, say Defendants, are responsive to Defendants’ document requests. Defendants further state that even though the seven assignors from which documents have been produced are large Medicare Advantage Organizations (“MAOs”), these productions are deficient – no assignor has produced “more than a few thousand documents,” one-third of the documents produced are nothing more than “slip sheets” (noting “Family Member Withheld as Non-Responsive”), no data has been produced regarding the receipt of PBM rebates and the production reflects missing documents for at least 14 of the assignor employees Plaintiffs had agreed to as custodians.

As to one assignor, Clinica Las Mercedes, Defendants urge barring all claims on its behalf. Plaintiffs had been ordered to serve by April 5, 2021, a list of custodians from each assignor likely to possess relevant ESI. As of this date, Plaintiffs have refused to propose any custodians employed by Clinica Las Mercedes, a group of medical centers in Florida. Having failed to identify custodians or produce organizational charts demonstrates Plaintiffs will not be able to produce the same documents that Defendants would have been entitled to had Clinica Las Mercedes filed an individual lawsuit. Hence, Defendants request that this entity's claims be barred.

As to documents from custodial files, Defendants explain that in April they sent to Plaintiffs documentation identifying key employees for 12 assignors “and requested that Plaintiffs add them as document custodians,” explaining why each custodian likely possessed information. The identities of these custodians are listed on Defendants’ Appendix A under the category “Defendant Additions.” There are forty-three (43) individual names documented. Plaintiffs objected to the proposed custodians but failed to provide any rationale for doing so. Thus, Defendants seek an order compelling Plaintiffs to produce documents from the custodial files of each individual.

Finally, given the delay in document productions, Defendants seek an opportunity to review documents and, once reviewed, propound additional requests if necessary.

III. Plaintiffs’ Argument

In a general sense, Plaintiffs do not assert that Defendants’ document requests are inappropriate. Instead, Plaintiffs contend that they need additional time to produce documents due to the complexities of this case.

In support of this argument, Plaintiffs provide a detailed description of the obstacles that have delayed document production. Plaintiffs maintain that they have worked diligently to identify and produce data from their various “non-party assignors,” meaning MAO's and “downstream entities” who, they say, paid inflated prices for insulin. For example, Plaintiffs point out that the assignors generally did not directly negotiate the prices or placement of insulin products on any formularies nor, with certain exceptions, did the assignors deal directly with manufacturers. These dealings were left to pharmacy benefit managers (“PBMs”) hired by MAOs – all of this limiting the total amount of documents available to be produced in response to Defendants’ production requests.

*3 More importantly, say Plaintiffs, the process of producing these documents is complicated, so complicated that the parties have agreed to employ technology assisted review (TAR). Plaintiffs have hired a vendor to take on the search and production of documents. However, not until June 18, 2021, did the parties actually agree on a TAR protocol and not until the end of August did the parties finalize search terms. This delayed production even though Plaintiffs had “pre-pulled” in excess of five million documents which they anticipated would be responsive to Defendants’ requests.

Moreover, each of the assignors have different IT systems which required the development of “scripts” (a program or sequence of instructions) to speed up retrieval among the different systems. The assignors’ data takes a significant amount of time to index, in some cases weeks. Once collected, the data must be stored, a costly process (roughly $75,000 a month thus far). On top of this, a fifth of the entire “review population” must be looked at manually, some 1.3 million documents.

Adding to this, according to Plaintiffs, just weeks before the September 15, 2021 deadline for substantial completion, Defendants proposed 2,200 additional search terms which Plaintiffs ran – again lengthening the process. And while additional searches are ongoing, Plaintiffs cannot validate their search until it is completed. Nevertheless, Plaintiffs have made rolling productions from the get-go.

Given this, Plaintiffs initially proposed:

IV. Defendants’ Reply

In their reply, Defendants reiterate several of the arguments advanced in their motion and again emphasize what they consider to be dilatory conduct by Plaintiffs in providing discovery. Simply stated, Defendants maintain that the discovery conundrum in this case is of the Plaintiffs own creation and was foreseeable, even prior to the inception of this litigation when they agreed to take on the claims of the assignors. In short, Defendants say, Plaintiffs knew or should have known that this would be a document intensive case and that they would bear the responsibility of securing those documents from their assignors yet failed to do so in a timely manner.

Defendants also say with reluctance that it now appears they have little choice but to accept Plaintiffs’ request for an extension with a proposed (but now passed) date of December 20, 2021, to complete their productions. However, they maintain that any deadline should be strictly enforced and Plaintiffs be barred from pursuing claims on behalf of any assignors whose documents were not provided when the deadline expires. Defendants ask again that Plaintiffs be compelled to produce documents from the custodians identified in Appendix A, that they be barred from pursuing relief on behalf of Clinica Las Mercedes, and also note that Plaintiffs have agreed that the deadline for Defendants to propound additional requests (if needed) should be extended two weeks beyond the deadline for Plaintiffs’ production.

V. The Parties Supplemental Submissions

*4 As previously noted, after filing the application described above, Defendants on January 7, 2022, forwarded correspondence supplementing their motion. In that correspondence, Defendants contend that Plaintiffs, despite promising productions by December 20, 2021, failed to do so. Defendants assert Plaintiffs have not produced any documents from 11 of 20 assignors, de minimis productions from two assignors and deficient productions from seven assignors. Citing Rule 37(b)(2)(A)(v), Defendants seek an order barring Plaintiffs from pursuing claims on behalf of the assignors who have produced no documents or de minimis documents and to order Plaintiffs to complete productions as to the remaining seven assignors within a week or be barred from pursuing those claims.

Defendants go to state that most if not all of the factors which should be considered in determining whether a dismissal is an appropriate sanction have been met, citing Poulis v. State Farm Fire & Cas. Co., 747 F. 2d 863, 868 (3d Cir. 1984). Simply stated, Defendants maintain Plaintiffs bear personal responsibility for producing documents, the failure to do so is prejudicial since it impedes Defendants’ ability to effectively defend this matter, Plaintiffs have had a history of delaying discovery and that the repeated missing of deadlines and failure to act constitutes willful conduct and bad faith. Defendants finally assert that the only option here in terms of sanctions is to bar the claims of the deficient assignors.

In response, Plaintiffs argue that the production responses are indeed sufficient and meet Defendants’ demands. Plaintiffs maintain that Defendants’ assumptions about inadequate production are wrong and instead, as to the bulk of the assignors, there were simply few or no responsive documents to provide even though the retrieval process was based on search terms proposed by Defendants. Therefore, as to the assignors with no or de minimis productions, Plaintiffs argue, few or no responsive documents actually exist. As to the remaining assignors, Plaintiffs insist that they have received over 6,000,000 documents of which some 88,000 were responsive and have been produced.

In short, Plaintiffs maintain that they have effectively complied with their discovery obligations and that the seeming dearth of documents derives from the fact that these assignors are “downstream entities that did not have contracts with PBMs or buy directly from manufacturers.” Given this, Plaintiffs say, Defendants’ requests for sanctions should be denied.

Most recently, Defendants have submitted a letter to the Court once again reporting that, despite extended deadlines, Plaintiffs have merely produced what Defendants say are zero or a de minimis number of documents from 12 of the 19 assignors still at issue in this case. Defendants further assert – despite Plaintiffs’ claim – that their adversaries have not produced any additional, responsive documents as of the end of December. Defendants say that it is facially implausible for assignors who have collected almost $50 million in insulin expenditures to have zero or nearly zero documents and the Plaintiffs are stonewalling Defendants’ discovery efforts, putting them in an untenable position given the March 5, 2021 fact discovery deadline.

VI. Findings

In analyzing this motion, the Special Master notes the following. This application stems in part from a prior motion to compel production resulting in the Order of January 20, 2021, which required Plaintiffs to produce documentation maintained by and in the possession of the entities from whom they received assignments. At the time of that motion, while Plaintiffs certainly argued that to produce this documentation was a complicated process, at that point, they failed to detail just how complicated (and potentially costly) that process could be. Now, having passed the (extended) discovery deadlines for providing responsive documents, Defendants describe the complexity involved in retrieving the documents and the conundrum they face when producing this information.

*5 Additionally, Plaintiffs inferentially note that their assignors are not parties to the lawsuit, something which presumably creates an additional hurdle to jump. While technically true, having accepted assignment of these various claims, Plaintiffs cannot distance themselves from their discovery obligations which they assumed upon accepting the assignments. Plaintiffs made a financial calculus when they entered agreements to collect the debts and cannot use as an excuse that their assignors’ status as “non-parties,” over whom they have limited control and who presumably have little incentive to assist in this litigation, presents a challenge.

With this said, however, the Special Master recognizes that there might be practical difficulties in complex litigation, such as this matter, which can result in production delays out of the control of the litigants and which may not be cognizable until deep into the discovery process. This is not a motion which implicates whether or not a production request is substantively inappropriate, lacks relevance or seeks documentation which is privileged or immune from discovery under Rule 26 or any of the other Federal Rules of Civil Procedure which govern this action, but rather one which implicates practicalities of discovery.

Indeed, the Special Master has already considered these issues as a result of a prior motion in which the Defendants’ application was granted and by which Plaintiffs had been ordered to provide documentation possessed by the assignors as if those assignors were named parties to this lawsuit. Therefore, the issue in this instance is whether Plaintiffs have presented sufficient reasons to extend the time in which to provide discovery maintained and in possession of the assignors in accordance with the previous order.

Generally speaking, the District Court, here through the assignment of a Special Master, has discretion to manage the schedule of litigation under Federal Rule of Civil Procedure 16; see Newton v. A.C. & S., Inc., 918 F. 2d 1121, 1126 (3d. Cir. 1990) (“The intent and spirit of Rule 16 is to allow courts to actively manage the timetable of case preparation [.]”); see also, U.S. Sec. and Exch. Comm'n v. Infinity Grp. Co., 212 F. 3d 180, 197 (3d. Cir. 2000) (stating that “[m]atters of docket control and scheduling are within the sound discretion of the district court”). See also, Williams v. Sullivan, 08-cv-1210, 2011 WL 2119095, at *1 (D.N.J. May 20, 2011), report and recommendation adopted, 08-cv-1210, 2011 WL 2112301 (D.N.J. May 25, 2011), aff'd, 506 F. App'x 156 (3d Cir. 2012). As the parties well know, the Stipulation Regarding the Appointment of the Special Master here directs the Special Master to address discovery disputes and motions under the Federal Rules of Civil Procedure 26-37 and 45.

Along these lines, Rule 16 provides that a court may modify a scheduling order “only for good cause and with the judge's consent.” Fed. R. Civ. P. 16(b)(4). To establish good cause in this context, the party seeking the extension must show the deadline set forth in the scheduling order “cannot reasonably be met despite the diligence of the party seeking the extension.” Fed. R. Civ. P. 16(b) Advisory Committee Notes to 1983 Amendments; see also Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 469 (D.N.J. 1990); McElyea v. Navastar Int'l. Transp. Corp., 788 F. Supp. 1366, 1371 (E.D.Pa. 1991), aff'd without opinion 950 F. 2d 723 (3d. Cir. 1991). Good cause may also be satisfied if the movant shows that the inability to comply with a scheduling order is “due to any mistake, excusable neglect or any other factor which might understandably account for failure of counsel to undertake to comply with the Scheduling Order.” Newton v. Dana Corp., 94-cv-4958, 1995 WL 368172, at *1 (E.D. Pa. June 21, 1995) (quoting Gestetner Corp. v. Case Equipment Co., 108 F.R.D. 138, 141 (D.Me. 1985)).

*6 While the application before the Special Master is a motion by Defendants, in essence, Plaintiffs are the parties seeking the Court's approval for an extension of existing discovery deadlines, including the prior Order compelling production of assignor discovery. In analyzing this matter, as noted, the Special Master recognizes that this is a multi-party, complex litigation which is heavily document sensitive and for which there may be hundreds of thousands, if not millions, of pages of documents which will be exchanged among the parties. For the purpose of this motion, the Special Master accepts Plaintiffs’ factual assertions that the process of retrieving the requested documents from the various assignors is a tedious and complicated process, requiring a good deal of effort and rather time consuming.

Based upon what has been submitted by the parties, however, the Special Master has no definitive way of determining whether Plaintiffs’ production on behalf of the assignors is truly deficient or truly adequate. There is simply no way of assessing whether the documents produced to date fully comply with the requests made or whether the methods used to retrieve and identify these documents were faulty. Nor, for that matter, do Defendants.

Given all of this, the Special Master concludes that additional time is required for the Plaintiffs to complete substantial document production. However, while taking into account these practical realities, and given the fact that extensions of time have already been granted, the Special Master also recognizes that there must be some hard, fast and realistic deadlines for the production.

Therefore, the Special Master makes the following rulings:

VII. Conclusion

For these reasons previously set forth, Defendants’ motion is GRANTED in part and DENIED in part.

Date: February 8, 2022